Marvell To Cut Headcount 17% As It Revamps Mobile Platform Business; Stock Up 8%

(RTTNews) - Marvell Technology Group Ltd (MRVL), a provider of integrated silicon solutions, on Thursday said it is drastically restructuring its mobile platform business and will cut its global headcount by about 17%.

Marvell said the restructuring is part of efforts to focus the mobile product line on anticipated more profitable opportunities and streamline its expenses.

The restructuring will begin immediately and the company expects the major activities to take place through the end of fiscal 2016. As a result, the company expects to incur total charges of about $100 million to $130 million.

The major components of the total charge include severance and employee-related costs expected to be incurred in the third and fourth quarters of fiscal 2016 and are expected to be in the range of $45 million to $55 million.

Other major components include facilities and asset impairment charges in the range of $30 million to $40 million and an inventory write down charge in the range of $25 million to $35 million.

Given the early stages of the restructuring process, the amount and timing of the aforementioned charges may be updated, the company said.

The restructuring of the mobile business is expected to result in annualized operating expense savings in the range of $170 million to $220 million.

Based on preliminary estimates for the first half of fiscal 2016, the company's mobile platform generated roughly $122 million in revenues and roughly $13 million in gross profit.

Marvell said it will continue its strong commitment to wireless connectivity such as WiFi and other wireless standards needed to support its strategies in existing markets as well as expanding into emerging opportunities in IoT and automotive.